CrowdStrike is a disruptor 🗽 in the cybersecurity industry, the 2nd fastest SaaS company that reached $2bn ARR. It’s also a “partner-first company” with ~75% of its sales via #channel partners. Let’s look at the role that #partnerships, platform and network effects play in their success.
🏆 CrowdStrike - top 10 SaaS
CS is a cybersecurity cloud platform delivering endpoint and workload protection. It became famous in 2016 for tracing Democratic National Committee hack back to Russia.
In numbers: 2.3Bn ARR, 21K customers, incl. 258 of Fortune 500
🎯 “We're a partner-first company, that's the way I built it. We haven't wavered from that…” Crowdstrike CEO and Co-founder, George Kurtz
It’s not a coincidence that the cybersecurity industry that is reliant on trust is distributing mostly with channel partners who already built trusted relationships with customers.
CS's Partner-Led growth in FY’22 was impressive (see graph):
Partner Sourced ARR +83% YoY
MSSP (Multi-service security providers) Partner ARR +200%
AWS Marketplace ARR +100%
☁️ Salesforce of cybersecurity
Among CS’s founders, both CEO and CTO were repeat founders who became McAfee execs via acquisitions of their previous startups. After having first row seats in one of the top companies in the industry, in 2011 they decided to create “Salesforce of cybersecurity” based on 3 key ideas:
Take cybersecurity to the cloud
Apply modular architecture of a platform to cybersec
Leverage network effects enabled by 1 & 2
CS reached a $1Bn valuation in ~5yrs and IPOed in 2019.
📈#Networkeffects of cybersecurity cloud
CS innovation included a light-weight agent that seamlessly runs on your computer, mobile, etc. and doesn't require reboot to install (important distinction, as it can be dropped and up and running on many devices quickly).
Crucially, the monitoring and attack mitigation is powered by the cloud-based 📊 “Threat Graph” that now monitors 7 Trillion events/week (user, app behavior) using ML and behavioral analytics.
“Threat graph gives us unique insight… and you can't do that if you're not cloud native. We call it community immunity. We see all kinds of attacks across 176 different countries that benefit accrues to all of our customers” CS CEO
💡 Built as an extensible SaaS #platform from the start
In 2019 at IPO CS had 9 modules, now 23 as the company expands to identity and access management.
60% Subscription Customers use 5+ modules.
9 yrs in, in 2020 they launched CrowdStrike Store, building up a unified security cloud ecosystem with trusted 3rd party apps. It grew to ~100 apps today.
CS CEO: “Customers today what they're looking for is best of platform. In the early days of security, I've been in it over 30 years, it used to be best of breed products. Then it was best of suite. Now, it's best of platform. What I mean by that, it means that customers don't want to engineer their own solution. They like Lego blocks. They want to pull the platforms, and they want to stitch them together via API.”
Expanding from Large Enterprise to SMBs with partners
CS initially targeted large enterprise accounts where they reached ~ 35% market penetration in 2022. 537 of the Global 2000 companies are among their customers.
Now, especially with the rise of IoTs, CS sees a big expansion opportunity in Mid-Market and all the way down to SMBs (5-250 FTE), where their penetration is only 3% and 1% respectively.
According to Michael Rogers, CrowdStrike‘s VP of Global Alliances:
“If you look at that addressable market, just in the SMB space, it's north of 50 million companies that are running on legacy on-prem solutions. It really provides us an opportunity to provide those customers with next generation threat protection, detection and response. Partners are the route to get there…
50 million companies require a number of service providers and MSSPs to get to that market. And that's where we're making our bets.”
CS’s partner with:
Solution Providers (regional & large solution providers)
Global System Integrators
MSSPs (Multi-service security providers)
CrowdStrike app store partners.
MSSPs and CrowdStrike affinity
There are +500K open positions in cyber security (according to CS) and Service Providers and MSSPs are providing service to those customers that are understaffed.
These MSSPs are harnessing the CrowdStrike platform to bring a cloud native best of breed solution to their customers to augment and enhance the services that they bring to those customers.
Crowdstrike co-founder and CEO:
“Why have we been successful there? Well, we've taken the right approach to not compete with partners to augment what they're trying to do. What we've seen in the managed service world is that the managed service providers are looking for the best endpoint platform that they can plug in and offer other services.
I think we've figured out a way to complement the services that they have in those areas, and it's been very effective. Of course, customers want our technology, so they're clamoring to these partners to work with us. We will continue to do that.
I think we've put some great proof points out on our success in managed service, in the cloud providers as well as traditional resellers.”
AWS Marketplace among the fastest growing channels
CrowdStrike platform Falcon is also available in the AWS Marketplace, which allows AWS customers to easily purchase and scale their consumption with pay-as-you-go pricing. CrowdStrike was one of top ISV partners by transaction volume on the AWS Marketplace in In FY22 with transacted ARR through the AWS marketplace growing +100% YoY.
Alliance Program Management Office
In 2022 CrowdStrike established for the first time ever Alliance Program Management Office (APMO).
Michael Rogers, CrowdStrike‘s VP of Global Alliances:
“That team is focused on building out our next generation partner program - processes, it's ring fencing, but it's most importantly, identifying capabilities for partners to expand, to reduce friction and grow their business together with CrowdStrike”.
Program Harmony - another key area for CS partners
CS is now “taking the majority of the partner types and starting to look at it with the customer in the middle. Multiple partners can play a role on a journey to bringing a customer on board initially, to supporting that customer going forward. And they can all participate and be rewarded for their contribution to that opportunity.”
Measuring partner happiness
CS annually surveys all partner types in their ecosystem, using Net Promoter Score model, looking how they rate against other SaaS companies.
CrowdStrike is a fascinating company, TBC.